Archives: Quiz

Scenario: Alexander and Vanessa Alexander and Vanessa benefit from scientific research. Alexander’s marginal private benefit from such research is given by the equation P = 200 ” Q, where Q refers to the amount of research undertaken and P is […]

_____ is a means-tested program. A) Expenditure on national defense B) Social Security payments to the disabled C) The food stamp program D) Purchasing a new city police car (Table: Costs of Birthday Cakes) Look at the table Costs of […]

Which of the following statements concerning monopoly is TRUE? A) Monopoly firms are always larger than perfectly competitive firms. B) A monopoly has no rivals. C) Barriers to entry do not prevent other firms from entering a monopolized industry. D) […]

The incentives built into the market economy ensure that resources are put to good use and that opportunities to make people better off are not wasted. This means that: A) people usually are not selfish enough to exploit opportunities to […]

Chile has a comparative advantage over the United States in copper. Which of the following is a source of this comparative advantage? A) mild temperatures B) large deposits of copper ore C) no opportunity cost associated with copper production D) […]

A recent news story reported that the Organization of Petroleum Exporting Countries is expected to decrease the supply of oil next summer. Summer is traditionally a time of increased demand for oil because of vacation travel. What would be the […]

Figure: The Average Total Cost Curve (Figure: The Average Total Cost Curve) Look at the figure The Average Total Cost Curve. The total cost of producing 10 pairs of boots is approximately: A) $13. B) $54. C) $131. D) $1,308. […]

A perfectly competitive firm maximizes profit in the short run by producing the quantity at which: A) TR = TC. B) MR = MC. C) Q × (P ” ATC) = 0. D) P < AVC. Both the United States […]

(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, […]

Table: Lindsay’s Farm (Table: Lindsay’s Farm) Look at the table Lindsay’s Farm. When Lindsay produces 50 units of produce, her total cost is: A) $250. B) $50. C) $200. D) $350. Answer: A Figure: Demand for Coconuts (Figure: Demand for […]

Advocates of trade barriers suggest that the barriers are needed for national security, job creation, and to: A) protect producers who are just starting out so that they can become more established. B) eliminate the need for governments to become […]

Figure: Consumer and Capital Goods Answer: A Answer: A (Figure: Consumer and Capital Goods) Look at the figure Consumer and Capital Goods. The movement from curve 1 to curve 2 indicates: A) a growing ability of the economy to produce […]

If the government decides to impose a $700 tax on U.S. citizens vacationing abroad, then the deadweight loss from this tax will be: A) relatively small. B) relatively large. C) zero. D) absorbed by foreign governments. Figure: Water Works (Figure: […]

The demand curve for a monopoly is: A) the MC curve above the AVC curve. B) the MR curve above the horizontal axis. C) identical to the MR curve. D) also the industry demand curve. Suppose the elasticity of demand […]

The efficient level of pollution is the quantity at which: A) its total benefits exceed its total costs to society by the greatest possible amount. B) its total benefits to society equal its total costs to society. C) the marginal […]

Figure: Collusion (Figure: Collusion) Look at the figure Collusion. The price charged by the industry with collusion is shown by: A) W. B) X. C) Y. D) Z. Suppose the government imposes a $10 excise tax on the sale of […]

If government decides to control the amount of a good allowed into a market, this will: A) always result in an increase in efficiency in the market. B) increase incentives for market participants to engage in black market activities. C) […]

Figure: Short-Run Costs (Figure: Short-Run Costs) Look at the figure Short-Run Costs. A is the _____ cost curve. A) average total B) average variable C) marginal D) total Answer: C Which of the following statements is FALSE? A) The income […]

Wenqin is a farmer, and in the short run she produces 100 bushels of wheat. Her average total cost per bushel is $1.75, total revenue is $450, and total fixed costs are $100. Wenqin’s: A) average fixed cost is $1.50. […]

(Table: Production of Bagels) Look at the table Production of Bagels. Diminishing marginal returns begin with the addition of the _____ worker. A) third B) fourth C) fifth D) sixth Answer: B Answer: Which of the following is most likely […]

Figure: Marginal Private Benefits and Marginal Social Benefits (Figure: Marginal Private Benefits and Marginal Social Benefits) Look at the figure Marginal Private Benefits and Marginal Social Benefits. One way for the government to achieve this socially optimal level is by: […]

Mikail’s perfectly competitive camera memory card”producing factory is making positive economic profits. If the price of memory cards is $9, if Mikail’s output is 3,000 cards a month, and if his monthly average total cost is $7, what are his […]

Figure: The Market for Yachts (Figure: The Market for Yachts) Look at the figure The Market for Yachts. If the government imposes a $30,000 tax on yachts (collected from the producers), consumers will pay _____ of the tax and producers […]

Over the past several years, the demand for phone operators has fallen dramatically. Which of the following would account for this development? A) an increase in the number of automated answering services B) a decrease in the technology associated with […]

Many public utilities burn oil to generate electricity. If the price of oil increases, we expect a shift to the _____ in the _____ curve for _____ and a _____ price for electricity A) right; supply; electricity; lower B) left; […]

Pizza is a normal good. If students’ incomes at your college increase, the effect on pizza will be: A) an increase in the demand. B) an increase in the quantity demanded. C) a decrease in the demand. D) no change […]

Figure: A Market in Equilibrium (Figure: A Market in Equilibrium) Look at the figure A Market in Equilibrium. At the equilibrium price, this market’s producer surplus is equal to the area: A) ADI. B) EHF. C) AIF. D) DIF. A […]

Table: Crop Income) Look at the table Crop Income. Brent is a farmer, and his income depends on the weather. A) Calculate Brent’s expected income. B) Calculate Brent’s expected utility. If Japan levies tariffs on U.S. goods entering Japan, this […]

(Table: Production Possibilities Schedule I) Look at the table Production Possibilities Schedule I. If the economy produces 10 units of capital goods per period, it also can produce at most _____ units of consumer goods per period. A) 5 B) […]

Deadweight losses arising from an excise tax are greatest when demand: A) and supply are relatively inelastic. B) is relatively inelastic and supply is relatively elastic C) is relatively elastic and supply is relatively inelastic. D) and supply are relatively […]

A cartel is an example of: A) price extortion. B) price leadership. C) overt collusion. D) perfect competition. If they spend all night writing computer programs, Laurence can write 10 programs, and Carrie Anne can write 5. If they spend […]

The market for milk is initially in equilibrium. Milk producers successfully advertise to encourage milk drinking. At the same time, more milk producers enter the market. Standard demand and supply analysis tells us that: A) the equilibrium price and quantity […]

Which of the following is most likely to be observed when firms engage mainly in nonprice competition? A) actively encouraging the sale of generic as opposed to brand-name products B) advertising and product differentiation C) discounts offered through coupons D) […]

Joe’s budget line reflects the _____ available to Joe if he spends _____ of his income. A) consumption bundles; all B) consumption bundles; part C) utility; all D) utility; part Figure: Supply of Coconuts (Figure: Supply of Coconuts) Look at […]

If a decision maker chooses an option that leaves him or her worse off than choosing another available option, he or she is: A) using bounded rationality. B) basing the decision on risk aversion. C) making an irrational decision. D) […]

(Table: The Cost of Producing Gadgets) Look at the table The Cost of Producing Gadgets. According to this table, the marginal cost is: A) increasing at a constant rate equal to $5. B) increasing at an increasing rate. C) increasing […]

Because of tax competition, state and local taxes tend to be _____; however, federal taxes tend to be _____. A) regressive; regressive B) progressive; regressive C) progressive; progressive D) regressive; progressive Jacquelyn is a student at a major state university. […]

Figure: The Marginal Decision Rule (Figure: Marginal Decision Rule) Look at the figure The Marginal Decision Rule. To the left of point C (e.g., at q1): A) economic profit is the vertical distance between curves B and MC. B) the […]

Figure: Market for Hamburgers (Figure: The Market for Hamburgers) The figure The Market for Hamburgers shows the weekly market for hamburgers in Irvine, Kentucky. If 400 hamburgers are sold, producer surplus will equal: A) $650. B) $400. C) $510. D) […]

A price ceiling will have NO effect if: A) it is set above the equilibrium price. B) the equilibrium price is above the price ceiling. C) it is set below the equilibrium price. D) it creates a shortage. (Table: Workers […]

Figure: Cost Curves for Corn Producers (Figure: Cost Curves for Corn Producers) Look at the figure Cost Curves for Corn Producers. The market for corn is perfectly competitive. If the price of a bushel of corn is $4, in the […]

(Table: The Demand for Chocolate-Covered Peanuts) Look at the table The Demand for Chocolate-Covered Peanuts. If George, Barbara, and Dan are the only three buyers in the market and the price of a bag of chocolate-covered peanuts is $0.80, the […]

Figure: Production Possibility Frontier (Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. This production possibility frontier is: A) bowed out because of increasing opportunity costs. B) bowed in because of increasing opportunity costs. C) bowed in because […]

Restrictions on free international trade designed to insulate domestic industries from competitive market forces that originate beyond the borders of the country are _____ policies. A) competitive B) protectionist C) free-trade D) antitrust Some highways have one lane; others have […]

If the price elasticity of supply is: A) greater than 1, then the supply is price-elastic. B) greater than 1, then the supply is price-inelastic. C) zero, then the supply is price unit-elastic. D) greater than 1, then the quantity […]

If the market for buffalo meat is in equilibrium, the price of buffalo meat will probably _____ in the near future. A) increase B) not change C) decrease D) increase considerably Answer: B Answer: A Tankao makes Bluetooth sets for […]

A tax leads to a(n) _____ in consumer surplus and a(n) _____ in producer surplus. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease Public goods are NOT sold in efficient quantities in the marketplace because: A) […]

The price elasticity of demand for fresh tomatoes has been estimated to be 2.22. If a new insecticide and fertilizer treatment yields a 20% increase in the nation’s fresh tomato crop, how will that affect total revenue from fresh tomatoes, […]

Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month. Cindy’s monthly total fixed costs are $500, and her monthly total variable costs are $2,500. If for some reason Cindy’s fixed cost fell to $400, then […]

If an Engel curve has a positive slope A) both goods are normal. B) the good on the horizontal axis is normal C) as the price of the good on the horizontal axis increases, more of both goods in consumed. […]